Credit card annual The percentage rate, commonly known as APRs, determine how much interest you will pay if you keep the balance on your credit card. Your card’s APR may vary based on a few different factors, and there may be different types of APRs for each card. When shopping for a new credit card or negotiating rates on the current credit card, consider your card’s APR.
Why Your Credit Card APR Matters
It is best not to keep the balance on your credit card so that you can avoid interest charges, but more than 25% reward credit card holders keep the balance at least seven times each year, according to a 2018 survey from american news. If you keep a balance on your credit card, it is possible that the lowest APR can save you money, so it is a good idea to shop for the best rate.
If you keep the balance on your credit card, interest charges can be added quickly. As interest charges accumulate, they can become larger and more difficult to pay off the balance.
On the $ 1,000 balance paid over six months, if your card has a 16% APR you will spend about $ 47 on interest. If you have the same balance, but 20% APR, you will pay $ 59 as interest over the same period.
Although this difference may be small in the short term at a small equilibrium, it is more significant at a long-term equilibrium. For example, paying 16% over two years with an APR of $ 10,000 would cost $ 1,750 in interest. A single balance at 20% APR would cost approximately $ 2,215 in interest.
Current Credit Card APR Evidence
If you know the average APR for the type of credit card, then you can recognize a good offer when looking at it. Use this chart to compare credit cards with the average minimum and maximum APR offers of credit cards in the US News Card database. The average APR for all cards in the US News database is 15.57% to 22.87%.
|Rewards Card Type||Average Minimum APR||Average max apr|
|5% cash back||15.11%||23.52%|
|card type||Average Minimum APR||Average max apr|
|No balance transfer fee||20.26%||23.57%|
|Starter Card for Building Credit||17.85%||22.37%|
|No Annual Fee||15.28%||23.05%|
Credit Card Type APRs
Credit card APRs can be fixed or variable, although most credit cards have variable rate APRs. There are also different APR rates depending on how you use the credit.
- a Fixed APR When you sign up for your credit card and your terms and conditions will not change except under the detailed circumstances, it is closed. For example, if you pay late, you can trigger a penalty APR.
- a Variable APR Can change over time and is usually based on a benchmark rate. For example, a credit card can set its APR to prime rate of 3.5%. When the prime rate increases or decreases, your credit card will have an APR.
- Your Apr purchase This standard APR applies when you shop.
- Some Credit Cards Introductory apr, Which is typically 0% and may apply to purchases, balance transfers or both for an introductory period. Typically, the introductory APR period is 12 to 18 months.
- a Penalty apr You can apply when your payment is delayed more than 60 days or you have refunded your payment. Penalty APR is usually higher than your purchase APR. However, your issuer needs to review your account at least every six months to determine if your APR can be reduced after a good payment history.
- a Cash advance apr Applies when you check a credit card or use your credit card to withdraw cash from an ATM. Cash advance APRs apply immediately without a grace period, usually higher than when APRs are purchased and a cash advance fee may apply to each cash transaction.
- Although you may be able to get Balance Transfer APR At 0% for an introductory period, not all cards are with them. Some cards have an additional APR set for all balances transferred to the account.
Reducing your credit card APR
Credit card issuers compete on many factors, and your APR is one of them. You can use this to your advantage whether you are shopping for a new card or maintaining an old credit card account. If you need to keep a balance, it is a good idea to do whatever you can to reduce your card’s APR.
Compare Credit Cards. Whatever your goals are for using a credit card, you usually have at least some options with similar features. When you are shopping for a credit card, compare the APR of each card, among other features.
“Know your credit score before applying,” says Gerri Detweiler, director of education for Nava, which helps small businesses build credit. “A credit score will be one of the biggest factors in determining the rate you qualify for. These days, you can usually find out which credit score to issue before you apply. Chances are. “
Look for 0% introductory APR offers. Many cards offer a 0% introductory APR, which may allow you to avoid interest charges on purchases or balance transfers during the introductory period. A 0% introductory APR may be useful if you have the balance to pay or plan to make a large purchase that you need to pay on time.
Choose a low interest credit card. Another option for carrying the balance is a dedicated low-interest credit card, which may offer lower interest charges over a longer period rather than an introductory period. This type of card cannot earn outstanding rewards, so you can use it specifically for the balance you need to carry and are not required as a prize-earned credit card.
Although the Detweiler does not think it is necessary to purchase with a credit card with a low APR, if you plan to pay in full each month, she says that having a card with a low APR is great, so you need to shop for it. Does not require a new if you need to keep a balance unexpectedly.
Call your issuer to issue your rate. If you are an existing cardholder, talk to your issuer and ask for a lower rate. Can’t say no, but if it says yes, you can save significantly on interest charges each month. You may have a strong case for negotiation if you can point to an excellent payment history, if you have a longer card or other similar cards have a more competitive rate, so do some research before calling.
“If you opened the card and you now have better credit scores, call your issuer and ask for the reduction,” Ulzheimer says. “They may or may not honor that request, but they certainly don’t want to lose you as a customer. While you’re at it, ask for a higher credit limit. You can use that aspect of the card. Can also improve. “
Pay your remaining on time. The best APR is the one you never have to pay. The APR of your credit card does not matter if you pay your balance on time and every month. Manage your expenses so that you do not over-charge to pay during each billing cycle, and set up automatic payments and reminders, so that you forget about paying in full on time.
Credit card with the lowest minimum APR
Some of the card offers on this site are from companies that are clients of US News. Advertising ideas can influence offers that appear on the site, but do not affect any editorial decisions, such as which card products we write about and how to evaluate them. This site does not include all card companies or all card offers available in the market.